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As far back (or even further, if one looks harder) as 2006, National (and it’s little “buddy”, ACT) was advocating privately-run prisons as a means of saving taxpayers money. They were supposedly more cost-effective, and would save the country considerable sums of money.

In June 2006, the then-National Party Law & Order Spokesman, Simon Power, said in a press release,

“Overseas experience indicates that contracting out prison operations reduces costs, both in the design and construction and in the management of prisons.”

Power was effusive in his enthusiasm for privately-managed prisons, going so far as to quote Treasury documents which also promoted the concept.

“The average per-prisoner cost over the five years of private management of ACRP from 2000-2005 was $42,720 per prisoner per annum, compared to the average cost for Corrections to keep a remand prisoner of $52,925in 2001/02. Of the original short list of four tenderers for ACRP, the Public Prisons Service was listed as fourth. Aside from cost advantages, Treasury has argued that contestability of prison management also encourages innovation in reducing recidivism…

…The British National Audit Office review of the private prison system in the UK concludes that “competition has helped drive up standards and improve efficiency across the prison system as a whole.”

Throughout the press releases, and policy documents, both National and ACT complain that “Labour’s objection to private prisons has been ideological”.

It is also interesting to note that National compares the figure of $42,720 per prisoner per annum, over a five year period with that of $52,925 over a two year period. Neither of National’s references provided on their policy paper can be verified on-line. So it seems that National may be comparing an average figure over five years with an average figure over two years, which results in privately-run prisons appearing to be a cheaper option.

National’s dubious figures are then parroted by others, such as right-wing bloggers,

“Delighted to see the new Wiri prison will be openly tendered. Not only may it cost less, but more importantly it provides opportunities to have a lower escape rate, and a higher rehabilitation rate.”

As someone infamous once said, if you tell a lie big enough and keep repeating it, people will eventually come to believe it.

In November 2009, the year-old National Government passed legislation – under Urgency – permitting prisons to be handed over to private companies for management. Quite why this piece of legislation was considered “urgent” has never been made clear.

Corrections Minister Judith Collins claimed that National’s previous experiment in privately-run prisons, in the late 1990s had been “generally positive”. ACT’s Law & Order spokesperson, David Garrett, stated that ” international data showed privately run prisons were cheaper and delivered better outcomes“.

Labour’s Lianne Dalziel pointed out that ten out of eleven British prisons were in the bottom 25% of all the prisons on performance measures.

In May 2010, the Green Party released a media statement that said,

“Private Prisons cost more

Privatising Auckland prison is a dangerous precedent that will increase costs and compromise New Zealand’s justice system, said the Green Party today.

John Key’s Government announced yesterday the joint Mt Eden-Auckland Central Remand Prison (ACRP) will be run privately. The corporation to run the prison will be announced by the end of the year.

“The last privatisation experiment with the ACRP increased costs by $7000 per prisoner,” said Green Party Corrections Spokesperson David Clendon…

… Evidence from the US and Australia shows that private prisons do not reduce costs for the Government. Research from New South Wales suggests prisoner safety is compromised because of the focus on profit…

… “If John Key’s Government really wants to reduce prison costs, they need to get serious about addressing the causes of crime – especially inequality which they seem to be hell bent on making worse,” said Mr Clendon.”

The Green Party blogsite links to two interesting reports on privatised prisons in Australia and US. The reports make for interesting reading and seem to undermine claims by National and ACT that privately-managed prisons are cheaper options. For example, the US Justice Office of Justice Reforms report stated, in part,

“The study resulted in some interesting conclusions. For example, it was discovered that, rather than the projected 20-percent savings, the average saving from privatization was only about 1 percent, and most of that was achieved through lower labor costs.” Source

The Australian report “Privatisation and New South Wales Prisons: Value for Money and Neo Liberal Regulation”, makes similar points,

“For example, Cooper and Taylor (2005), in a study of prison privatisation in Scotland, identify reducing labour costs and increasing labour flexibilities as a key reason for privatisations. We contend that, in the specific case of the New South Wales ‘Value for Money Report’, the government’s support for the maintenance of ‘at least one private prison’, in the absence of meaningful cost data, was on the basis of the continuing disciplinary effects it would have upon the union, and therefore the leverage it would grant the government in extending its workplace reform agenda.”Source

As for Corrections deputy chief executive Christine Stevenson claiming that “costs were high because it was New Zealand’s first PPP prison” – one wonders where she’s been for the last ten years?!

Has Ms Stevenson no knowledge of National’s previous experiment with privately-managed prisons? The Auckland Central Remand Prison (ARCP) was under private management from 1999 to 2005, after which the former Labour Government did not renew the contract.

If six years of private prison management has not privided the necessary experience to prevent spending $21 million on “consultants” and “internal costs”, then what confidence is there that this exercise will not end up costing the tax-payer vast sums of money?

The NZ Herald article quotes Conservative MP Richard Bacon,

“It is clear that [PPP] has spawned an entire industry of advisers who have done extremely well out of it.”

The whole point of this exercise is that private enterprise has the necessary expertise and experience to put this project together. Thus far there appears precious little indication that private management is most cost effective or efficient than State management.

However, as Damien Cahill and Jane Andrew write (“Privatisation and New South Wales Prisons: Value for Money and Neo-liberal Regulation”), the privatisation of prison management is not simply about cost-effectiveness per se. Instead, it is more about driving down employees wages.

Remember what Bill English let slip on 10 April of this year, on TVNZ’s Q+A, when English said the 30% difference in incomes between New Zealand and Australia is a way of competing,

“If we want to grow this economy we need capital and we’re competing for people too… and we need to get on with competing for Australia. So if you take an area like tourism, we are competing with Australia. We’re trying to get Australians here instead of spending their tourist dollar in Australia.” – Bill English

It seems that not all con-artists are in prison.

Some are busily trying to sell us a “lemon”. A bloody expensive one at that.

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***Additional Info***

1. One of the references in the National Party 2008 policy document – Dom Karauria, General Manager of Auckland Central Remand Prison (ACRP) – was an employee of GEO Group Australia Pty Ltd – the private contractor that managed the ACRP from 2000-2005.

2. Catholic organisation Caritas … noted that in the US the same people running private prisons were also involved in lobbying government for longer sentences. Source

3. In a June 2009 submission to the Law and Order Select Committee , GEO Group Australia Pty Ltd admitted that privately-managed prisons do not always deliver cheaper services;

“However, comparing the quality and cost of private and publicly−managedcorrectional centres is fraught with difficulties. Simple questions about whichapproach delivers the best outcome cannot always be answered definitively. Suchcomparisons must be based on a strict like−for−like basis and this rarely is possible,and the performance of any correctional centre varies over time through factors bothwithin and outside its control.There are correctional facilities under public−management that perform exceptionallywell, whilst others perform poorly. Whilst privately−managed correctional centrescannot reliably be stated as always being superior or inferior to publicly−managedcorrectional centres, on a number of occasions privately−managed correctionalcentres have been singled out for the highest praise…” Source